The Apprenticeship Levy can come across as confusing and a little daunting if you don’t fully understand the details surrounding it. To help you gain a better understanding, we have put together an Apprenticeship Levy Myth-buster.

All businesses must pay the apprenticeship levy.

No, only employers that pay more than £3m in wages are liable to pay the apprenticeship levy. Levy-paying employers contribute 0.5pc of their payroll into a fund each month, which can be re-invested in apprenticeship training for their business. And for every £1 contributed, the government adds 10p. And also, if you’re an employer with an annual pay bill under £3m then you don’t pay the levy – but the government will still fund 90pc towards the cost of your apprenticeship training.

Aren’t Apprenticeships for 16 -24 year olds? I don’t want young workers, I need experience.

Not at all, anyone can start an apprenticeship at any point in their life, whatever their age, background or career level. With levy funds, employers can train and upskill their existing workforce as well as hiring new recruits. Also you can use the levy funds to train existing employees who hold prior qualifications so long as the apprenticeship they are taking is relevant to their role and the most appropriate way of progressing or developing their career.

Apprenticeships are no use to my organisation as we do not employ manual workers – we are a tech company.

This might once have been the case, however, apprenticeships are now available in over 1,500 occupations across 170 industries, ranging from nuclear, banking to cyber security.

I have to spend all my apprentice levy funds myself.

No not necessarily. You can transfer up to 10% to your supply chain.

As an employer it seems to me that the Levy will mean I have less control my training requirements.

The levy makes it easier for employers to choose apprenticeship training that best suits their needs. Funding follows employer choice and this is different from previous models and forces training providers to become more responsive to employer needs. Employers’ levy contributions are paid into an apprenticeship service account which allows them to choose and pay for apprenticeship training more easily. If an employer is in a group of companies paying the levy together, the group can collect their funds into a single account.

To find out more about the Apprenticeship Levy, click here.

In short, what is the Apprenticeship Levy?

Gov.uk describe it simply, the Apprenticeship Levy is a levy on UK employers to fund new apprenticeships.

Who does it apply to?

It will be applied to businesses with annual pay bills in excess of £3 million, and the levy will be applied across all sectors.

How much is the levy likely to be?

The levy will be charged at a rate of 0.5% of an employer’s payroll. Each employer will receive an allowance of £15,000 to offset against their levy payment.

How is the levy collected?

It will be collected by the HMRC monthly via Pay As You Earn (PAYE).

Where is this allowance paid into?

After the levy is collected via PAYE, it then becomes accessible by the employer via a digital account service. The employer can then use the account to pay for apprenticeship training.

I am a levy paying employer, how do I access the digital account service?

You can sign-up and access your Apprenticeship Levy Service here.

What can we use the digital account service for?

The digital account allows you to:

  • receive levy funds for you to spend on apprenticeships
  • manage your apprentices
  • pay your training provider
  • stop or pause payments to your training provider

What can we use the allowance for?

You can use funds in your digital account to pay for apprenticeship training and assessment for apprentices that work at least 50% of the time in England.

How do we spend our allowance?

Once logged into your digital account you can select the ‘Find apprenticeship training’ to find approved apprenticeship training providers. You will then liaise with your chosen training provider to determine a prices and payment schedules.

Once you agree and the training has started, monthly payments will be taken from your digital account and sent to the training provider.

What if there is not enough money to pay for training one month?

If you don’t have enough funds in your digital account to pay for training in a particular month, you will be asked to share the remaining cost of training and assessing your apprentices for that month with the government. This is called co-investment.

This co-investment means that you will pay 10% of the outstanding balance for that month, and the government will pay the remaining 90% up to the funding band maximum. If your costs go over the maximum, then you must pay the difference out of your own budget.

What are the funding bands?

You can find full details of the funding bands and their maximums here.

One universal issue every business faces, regardless of the industry is, should you hire ready-made talent or should you work to develop your own talent?

Of course, you may need to hire a specialist with skills and qualifications that you don’t have inhouse but very often our own staff have skills and expertise that is overlooked or, more importantly they have the potential to develop if given the appropriate training and development.

Those employees that you can identify as “trainable talent” often possess three key qualities that is worth investing in:

  • Experience
  • Work Ethic
  • Cultural Fit

The advantages of developing your talent pool can help both the business and the individual. For example, the business can benefit from:

  • you choosing what new skills your workforce gains, targeting skills to meet the needs of your operation for now and in the future.
  • better customer service, better work safety practices and productivity improvements.
  • your demonstration to your workforce that you value them enough to invest in them, improving loyalty and staff retention. In turn, retention is a saving to you.

For the workforce there are myriad benefits including:-

  • they acquire new skills, increasing their contribution to the business and building their self-esteem
  • the training they do can take them into other positions within the organisation – positions with better prospects and/or better pay
  • they’re upskilled to do new and different tasks, which keeps them motivated and fresh
  • because they’re being trained on your time, they see that you value them enough to invest in them. A good company is seen as one that retrains rather than churns.

And the real bonus to your business? The Apprenticeship Levy can help you.